11 Building Good Credit Just like your high school GPA tells others how well you did in school, your credit record lets others know how well you manage your money. Your credit history is important Before a bank or business will loan you money or give you credit, they want to feel reasonably certain that you will make the agreed upon payments. Banks and businesses want to give their loans and extend their credit to people whose past behavior has shown them to be financially responsible. This is why having a good credit record is so important. How do you build good credit? The best way to build good credit is to always pay your bills on time. Being late with just one or two payments can adversely affect your credit report. Other things are taken into consideration when determining your credit rating, but paying your bills on time is the most important. Businesses are reporting on your performance Whenyouhaveacreditcard,takeoutaloan,oropenabankaccount,lenders and creditors provide information on your accounts (and your performance) to one or more of the three major credit bureaus. The credit bureaus then use this information to create, maintain, and update your credit report. When James went to buy a car, the car dealership checked his credit report. James didn't even know he had a credit report, and he was even more surprised to learn that his credit report included information on the date his credit card account was opened, his credit limit, payment history, and account balance. James was nevertheless happy to learn that because he had a good credit score, he was able to get a better interest rate on his car loan. Banks and lenders check your credit report to help them make decisions about you. Having a good credit report is, therefore, very important.